Concern at council pension costs

Greater life expectancy means pensions are paid over longer periods

Concern over the rising costs of council pension schemes have been highlighted by Audit Scotland.

The figures, which showed a major increase in fund liabilities, come two days after about 150,000 public sector workers staged a strike over pensions.

The report said extra cash pressures stemmed from greater life expectancy, meeting the equal pay agreement and up-to-date valuations of pension funds.

However, the report also said financial management was good at most councils.

The figures, based on council audits throughout Scotland, revealed that pension fund liabilities had risen significantly to £4.5bn in March last year from £1.9bn the year before.

The majority of the increase was attributed to changes in the way liabilities were calculated for accounting purposes.

But the report stated: "This is an area of growing concern which will place additional pressure on resources."

'Good news'

The report also found local government in Scotland spent £15bn in 2004/5, an increase of 6% on the previous year.

It revealed councils had a total of £241m which had not been spent or allocated to specific projects.

However, the report said these appeared to be "reasonable" in light of the pressures councils were facing due to major reforms.

Cosla president Pat Watters said the report was a good news story for councils.

He said: "We do acknowledge that this is a time of major change in the whole of the public sector and we want to ensure that this change is embraced in the correct manner.

"By that I mean that we do things for the long term benefit not just a quick fix for tomorrow."